Why company bylaws shouldn't be a form: the value of tailoring them to your needs.
- Mar 26
- 2 min read
A large proportion of the articles of incorporation drafted in Argentina are copies of standard templates. This practice, understandable in terms of cost and speed, carries a risk that often manifests itself with serious consequences when the first conflicts arise.
What a generic statute does not foresee
Conflict resolution mechanisms when there is a tie in voting or a decision deadlock. Very common in small companies with two partners (50% + 50%).
Quorum and majorities appropriate for the real power structure of society
Exit clauses (put/call, drag along, tag along) for divestment situations
Restrictions on the transfer of shares to unwanted third parties
The situation of death or incapacity of a partner
Protection mechanisms for minority shareholders
Company valuation criteria.
Corporate conflicts often arise precisely at the most critical moments: when a partner wants or has to leave, when the company grows and interests diverge, or when difficult decisions must be made. A well-drafted set of bylaws anticipates these scenarios.
Key clauses of a tailor-made statute
Government and decision-making
What decisions require special majorities, what issues are the exclusive competence of the assembly vs. the board/management, and how are ties resolved.
Transfer of shares
Right of first refusal, restrictions on transfers to competitors, and valuation mechanisms in the event of forced transfers.
Exit mechanisms
Drag along and tag along, put/call options between partners, and valuation procedures in case of disagreement over the price.
Protection of minority shareholders
Enhanced information rights, limitations on related-party transactions, and guaranteed representation on governing bodies.
The cost of a custom-drafted bylaw is marginal compared to the cost of litigating a dispute that a well-designed bylaw could have prevented. Investing in preventative planning is always the most efficient approach.
